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HomeMy WebLinkAboutItem 4: Ordinance Concerning Used Merchandise Dealers ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Action: Ordinance Concerning Used Merchandise Dealers, and Amending Sections 4.989 and 4.990 of the Eugene Code, 1971 Meeting Date: February 13, 2006 Agenda Item Number: 4 Department: Eugene Police Staff Contact: Captain Elvia Williams www.eugene-or.gov Contact Telephone Number: 682-5114 ISSUE STATEMENT This is an opportunity for the council to take action on the proposed ordinance concerning used merchandise dealers. The ordinance would amend sections 4.989 and 4.990 of the Eugene Code 1971, which establishes an electronic reporting system for used merchandise dealers, directs the City Manager to establish an annual fee system which reflects the cost of providing electronic automated reporting services and clarifies the types of items that would be subject to mandatory reporting. BACKGROUND The City Council held a work session on January 11 and a public hearing on January 23, 2006, to discuss the proposed amendments to the Used Merchandise Dealer Ordinance. At the request of Councilor Papé, an alternative funding option has been included in Attachment C of this packet. In this option, the City of Eugene would fund the entire cost of implementing the electronic automated reporting system. If this option were chosen, the draft ordinance (see attachment A) would require an additional edit to section (4) Reporting Fees. The City of Eugene’s existing Used Merchandise Dealer Ordinance was adopted in 1996. Since that time, this region has experienced an explosion of property crimes. In Eugene, the number of burglary cases increased 15.87% between 2004 and 2005. Updating the Used Merchandise Dealers Ordinance to require automated reporting and eliminate the time-consuming manual reporting method is an important strategy for law enforcement. This strategy is designed to identify the repeat criminals involved in property thefts and to create a better mechanism for returning stolen items to the lawful owners. The proposed ordinance builds on the existing code by modernizing the system to require electronic reporting which will provide law enforcement with ‘real time’ data on sales that can be matched to stolen property. A significant aspect of this proposal is the coordination of a regional approach from the largest law enforcement agencies: the Eugene Police Department (EPD), Lane County Sheriff’s Office (LCSO) and the Springfield Police Department. All three agencies currently have a Used Merchandise or Secondhand Dealer Ordinance which regulates stores in their jurisdiction. Over the last three years, representatives from the three agencies have developed this proposal to standardize the regulations for all stores and create an automated reporting system that provides law enforcement agencies with real- time data on goods being purchased by used merchandise dealers. L:\CMO\2006 Council Agendas\M060213\S0602134.doc Eugene has dedicated two property detectives and one civilian employee to regulate approximately 60 secondhand stores in Eugene that annually produce over 54,000 transactions. The detectives enforce the existing ordinance and manually distribute and collect reports. The civilian employee enters data from the paper slip reports into a database which then helps detectives to identify and recover stolen property sold or consigned to used merchandise stores and conduct investigations of individuals selling or consigning stolen property. Due to the volume of transactions and the limited staff available to work in this area, EPD can enter into Eugene’s database less than half of the secondhand dealer reports that have been physically collected by the two detectives, which in turn limits the comparison of secondhand dealer reports to stolen property lists. These limitations are not unique to Eugene, but are also experienced by Springfield police and the LSCO. The existing ordinance has not been effective in reducing the opportunity for individuals involved in property crimes to commit their crimes in one jurisdiction and sell the proceeds from that crime at a store in a neighboring jurisdiction. When this occurs, there is an increased likelihood that criminal activity will go undetected and stolen property won’t be recovered. Used merchandise dealers are a significant part of the retail industry and are also victims of property crime when they unknowingly accept goods which have been stolen. EPD conducted two sample examinations of secondhand dealer transactions from three local, full-service secondhand stores during a two-month period in 2003 and 2004. These samples revealed that 40.9% of the secondhand transactions were conducted by customers who have prior local arrest histories for property or drug crimes, excluding arson and less than an ounce of marijuana arrests/citations. Automated Reporting Pilot Project In 2001, due to rising property crime, Eugene and Springfield Police, the LCSO and other law enforcement officials met to discuss improvements to the system for identification and recovery of stolen property before it is resold and to identify and investigate individuals involved in the sale of stolen property. Eugene, Springfield and Lane County initiated an automated reporting pilot project in October 2002. The three-year, voluntary project demonstrated the reliability of the automated system and the ability of the system to integrate data from the electronic records to existing regional, state and national crime data bases. The effectiveness of automated reporting compelled the three law enforcement agencies to suggest the amendments (see Attachment A) to the Used Merchandise Dealers Ordinance which would be applicable to all jurisdictions and ensure that all regulated used merchandise stores in the region would be held to the same standards. Attachment B explains the process of automated reporting and data integration. Law enforcement agencies have met with representatives of the used merchandise stores on two separate occasions for feedback on the proposed ordinance. Understandably, most store owners were not initially interested in making changes to the existing ordinance. However, during the course of the information sessions many of the merchants’ concerns were addressed and participants in the pilot project were able to communicate the benefits of the process. On December 8, 2005, the Police Commission voted unanimously to support the draft Used Merchandise Dealer Ordinance. EPD and the LCSO are now in the process of amending their Used Merchandise or Secondhand Dealers Ordinance. Springfield Police Department plans to move forward with its ordinance amendment process on April 3, 2006. Although each of the agencies could independently contract to utilize automated reporting, the program is much more effective if all agencies can participate. Uniform adoption eliminates the opportunity for criminals to simply sell their stolen merchandise in another community or L:\CMO\2006 Council Agendas\M060213\S0602134.doc in the unincorporated areas of Lane County. Automated reporting programs are growing in North America and other jurisdictions in Oregon are now contemplating the future adoption of an automated reporting program. Although the expansion of communities adopting automated reporting is likely several years away, the eventual addition of more stores and more law enforcement agencies to an integrated database should considerably decrease criminal’s options to sell their stolen items. A significant outcome from the pilot project has been the integration of the vendors’ systems with the Area Information Regional System (AIRS). There are no available commercial products that will integrate with AIRS. Over the past three years, the vendor and AIRS staff have committed sizable resources in programming time to make the automated reporting system as seamless as possible. The result of this effort eliminates redundant data entry and allows processing by AIRS (local), LEDS (state), and NCIC (Federal) databases to identify stolen property. No other vendor in the commercial market has a product that will accomplish this without huge upfront programming and infrastructure costs. A question was raised at the public hearing regarding whether the purchase price of goods paid by used merchandise dealers was proprietary business information. The City Attorney has indicated that the City has “a general ability to enact reasonable ordinances for the regulation of businesses under the City’s police power to further the public’s health, safety and welfare.” Other jurisdictions in the state require the collection of pricing information and the state of Oregon requires the information for “pawnbrokers.” The information reporting requirements contained in the ordinance are similar to other requirements upheld in other jurisdictions around the country. RELATED CITY POLICIES The council goals of a “Safe Community -- where people feel safe, valued and welcome” and “Effective, Accountable Municipal Government -- a government that works openly, collaboratively, and fairly with the community to achieve measurable and positive outcomes” are both related to the proposed ordinance. COUNCIL OPTIONS The council may choose to: 1.Take action on this item as proposed; 2.Take action on the item after amending the proposed ordinance to include a new alternative financing model; or 3.Delay action on this item until a later date. The proposed ordinance has a number of stakeholders with varying perspectives. In summary: The Public The community has much to gain from this ordinance because the ability of law enforcement agencies to collaborate to reduce the easy sale of stolen property is greatly enhanced. Law Enforcement A regional automated reporting system will provide any law enforcement agency with internet access and password permission access to the database and the ability to match merchandise to lists of stolen serialized property. The system also is linked to state and federal databases. L:\CMO\2006 Council Agendas\M060213\S0602134.doc Businesses Businesses have mixed reactions to the proposed ordinance ranging from support to rejection. Most of the shops that participated in the pilot project are ready to continue with automated reporting. They have already invested in the infrastructure (computers and internet) and have made automated reporting an integral part of their business. Courts Eugene’s Municipal Court could experience some minor additional workload for administrative hearings, although experience in other jurisdictions shows this to be few in number. Circuit Court and the District Attorney (DA) could experience additional criminal filings. The DA is prosecuting “C” felony cases such as Theft I Sales (a typical pawn shop offense). Quicker discovery of the stolen property often leads to quicker resolution in Criminal Court. CITY MANAGER’S RECOMMENDATION The City Manager recommends that the council amend the Ordinance Concerning Used Merchandise Dealers, Section 4.989 and 4.990 of the Eugene Code, 1971 at the February 13, 2006, meeting. SUGGESTED MOTION Move to adopt an ordinance concerning used merchandise dealers and amending sections 4.989 and 4.990 of the Eugene Code, 1971. ATTACHMENTS A. Proposed Used Merchandise Dealers Ordinance B. Automated Reporting Fact Sheet C. Used Merchandise Dealers Ordinance Funding Models FOR MORE INFORMATION Staff Contact: Captain Elvia Williams, Investigation Division Telephone: 682-5114 Staff E-Mail: elvia.p.williams@ci.eugene.or.us L:\CMO\2006 Council Agendas\M060213\S0602134.doc ATTACHMENT A ORDINANCE NO. __________ AN ORDINANCE CONCERNING USED MERCHANDISE DEALERS, AND AMENDING SECTIONS 4.989 AND 4.990 OF THE EUGENE CODE, 1971. THE CITY OF EUGENE DOES ORDAIN AS FOLLOWS: Section 1. Section 4.989 of the Eugene Code, 1971, is amended to provide: 4.989 Used Merchandise Dealer - Requirements . (1) As used in this section, the following words and phrases mean: Proper] identification (a) [Approved. A currently valid identification [document] issued by a [city, county, state or federal] government agency [which bears a] that includes a physical description and photograph [and the signature] of the person [to whom it was issued] and bears the signature of the person. (b) Chief of police. The person authorized by the city manager to carry out the duties of the chief of the Eugene Police Department, or his or her designee. (c) Peace officer. As defined in ORS 133.005. Purchase (bd) . The buying, exchanging, transferring, collecting, consigning or otherwise acquiring of [articles] regulated property from another person not a used merchandise dealer, for resale, exchange or transfer by the purchaser. This includes taking possession of regulated property with an expressed or implied agreement or understanding to return regulated property at a subsequent time at a stipulated price or for the payment of a storage or handling fee. (e) Regulated property. 1. Except for property excluded in paragraph (e) 2. below, any used or secondhand personal property, including, but not limited to, precious metals and gems; watches, jewelry, and household items containing precious metals or precious gems; audio and video equipment and media; photographic and optical equipment; electrical office equipment; yard and garden tools; power equipment and tools; hand tools; telephones or telephone equipment; musical instruments; firearms; and sporting equipment. 2. The term “regulated property” does not include any of the following property: vehicles required to be registered with the state Motor Vehicles Division; boats Ordinance - 1 required to be certified by the state Marine Board; books; collectable trading cards (e.g., baseball trading cards or movie trading cards); glassware; furniture; clothes; refrigerators, stoves, washers, dryers, window air conditioner units, and other similar major household appliances; small kitchen appliances; or property that is purchased for investment purposes, limited to the following: a. Gold bullion bars or rounds (0.995 fine or better); b. Silver bullion bars or rounds (0.995 fine or better); c. All tokens, coins, or money, whether commemorative or an actual medium of exchange, adopted by a domestic or foreign government as part of its currency; or d. Postage stamps, stamp collections and philatelic items. Used merchandise dealer (cf) . 1. A[ny] person[, or employee of any person who, as all or part of a] who engages in, conducts, manages, or carries on any business that, as part or all of its business: 1a. Purchases [or sells used articles] regulated property; or [2. Wrecks, dismantles or disassembles a used vehicle and offers for sale the components thereof; or] 3b. Lends money on security of [used articles, except a person dealing exclusively in whole automobiles, books, clothing, furniture, electrical appliances, or farm implements and machinery; a person who purchases or sells used articles for four days or less in a six month period; or a nonprofit corporation or association that sells or otherwise exchanges only donated articles. For purposes of this section, "business" shall have the meaning attributed to the term in 26 USC Section 162, including but not limited to any regularly conducted activity directed toward the production of income or a livelihood, or any activity for which a federal income tax deduction was taken under 26 USC Section 162 within the preceding three years] regulated property. 2. A used merchandise dealer does not include: a. A person who engages in, conducts, manages, or carries on any business that does not buy regulated property outright, but occasionally accepts in trade regulated property as part or full payment for new articles, where such business is incidental to the primary business of the sale of new articles; b. A person who engages in, conducts, manages, or carries on any business that deals exclusively in Ordinance - 2 the purchase and sale of used whole automobiles, books, trading cards and sports memorabilia, clothing, furniture, major household electric or gas appliances, or farm implements and machinery; or c. A person who engages in, conducts, manages, or carries on any nonprofit corporation or association that purchases, sells or otherwise exchanges only donated articles. (2). [ Recording requirementsA used merchandise dealer shall:] (a) At the time of purchase, a used merchandise dealer shall accurately [R]record [at the time of purchase an accurate] the description of [each article] the regulated property purchased [by the dealer] and the [proper] approved identification of the person from whom the [purchase was made;] regulated property was purchased. (b) Used merchandise dealers shall [R]record [all] purchases [made by the dealer in type or ink and in duplicate on forms obtained from the city, and have a copy of each record available for regular pick- up by the city;] of regulated property via an automated electronic reporting system approved by the city. (c) [Maintain records] All records of purchases shall be kept in an orderly manner [at his/her place of] on the used merchandise dealer’s business[;] premises and open for reasonable inspection by peace officers upon their demand. Each used merchandise dealer shall keep a paper record of each purchase bearing the signature of the customer for a period of one year. [(d) Make all records and all articles purchased available for inspection by the city upon request; (e) Segregate articles purchased by the dealer to permit their identification from the records kept; (f) Comply with all applicable federal, state, and local laws and regulations.] (3) Reporting requirements. (a) Within 12 hours of a purchase, a used merchandise dealer shall input and transmit the recorded information required under subsection (2) using the automated electronic reporting system approved by the city. (b) Only reports containing complete information shall be deemed to comply with this section. (c) In the event that the automated electronic reporting system becomes inoperable, a used merchandise dealer’s computer system becomes inoperable, or other event that makes reporting within the time allowed by subsection (a) of this subsection impossible, the used merchandise dealer shall immediately report the occurrence of such event to the chief of police. The chief of police may suspend the reporting Ordinance - 3 requirements of subsection (a) of this subsection for a reasonable period until electronic reporting can resume. Once the chief of police determines that reporting can resume, used merchandise dealers must, within 12 hours, input and transmit the information required under subsection (2) for all purchases made during any period reporting was suspended by the chief of police using the approved automated electronic reporting system. (4) Reporting fees. The city manager shall establish fees for the use of an automated electronic reporting system in accordance with the procedures of section 2.020 of this code. Such fees shall reflect the costs associated with providing electronic automated reporting system services to used merchandise dealers. Used merchandise dealers shall be charged the fees on an annual basis, and the fees shall become due 45 days after the date billed. (3) 5 Limitations on the purchase of regulated property. (a) A used merchandise dealer shall not: (a)1. [Alter, sell or dispose of any property purchased by the dealer for seven days after the date of purchase during which the dealer is open for business to the public;] Purchase regulated property with serial numbers, personalized inscriptions or initials, or other identifying marks, which are or have been altered, obliterated, removed, or otherwise rendered illegible; [(b) Sell, exchange, dismantle, alter in any manner, or otherwise dispose of articles purchased by the dealer when prohibited from doing so by the city in writing, and until notified otherwise by the city in writing;] (c)2. Purchase regulated property from a person under the age of 18 years[ unaccompanied by a parent or guardian]; (d)3. Purchase regulated property from a person who is [incapacitated as defined by ORS 126.003(4) or who is] obviously under the influence of drugs or intoxicating liquor; or (e)4. [Purchase property which has had its serial number obliterated, defaced, removed or otherwise altered.] Knowingly purchase regulated property from a person who is not the owner of the regulated property or parent or guardian of the owner of the regulated property. (b) A used merchandise dealer shall comply with all applicable federal, state, and local laws and regulations. . (6)Limitations on the sale of regulated property (a) Regulated property purchased by any used merchandise dealer shall not be sold for a period of 7 full days after the date the report required in subsection (3) is received by the city. The used merchandise dealer shall maintain the purchased property in substantially the same form as purchased and shall not commingle the property in a manner that precludes Ordinance - 4 identification during this 7-day holding period. The purchased property shall be located on the business premises during normal business hours during this holding period so that it can be inspected as provided in subsection (7). (b) Upon reasonable belief that the purchased property is the subject of theft, the chief of police may provide notice to any used merchandise dealer not to dispose of any specifically described property purchased. The used merchandise dealer shall retain the property in substantially the same form as purchased. Upon receipt of notice pursuant to this subsection, the used merchandise dealer shall not sell, exchange, dismantle or otherwise dispose of the property for a period of time, as determined and stated in the notice by the chief of police, not to exceed 180 days from the date of purchase. (7) Inspection of used merchandise dealers and regulated property. Upon presentation of official identification, any peace officer may enter onto the business premises of any used merchandise dealer to ensure compliance with the provisions of subsections (1) - (6). The inspection shall be for the limited purpose of inspecting any regulated property purchased by the dealer, held by the dealer pursuant to subsection (6), or the records incident thereto. Any inspection pursuant to this subsection shall only be authorized to occur during normal business hours. . (8) Administrative rulesThe city manager or the manager’s designee is authorized to promulgate rules necessary to carry out the provisions of this section following the procedures of section 2.019 of this code. (9) Enforcement. Any peace officer may enforce the provisions of this section 4.989. . (10) PenaltiesViolation of any of the requirements in subsections (1) – (8) of this section is subject to punishment as provided in subsection 4.990(10). In addition to the remedies provided in subsection 4.990(10), additional proceedings may be instituted, including but not limited to proceedings for injunctive relief, to enforce the provisions of subsections (1) –(8) of this section. Section 2. The entry for “4.980 to 4.989” in the matrix of Subsection (1) of Section 4.990 of the Eugene Code, 1971 is amended, and a new entry for 4.989 and a new Subsection (10) are added thereto, to provide: 4.990 Penalties - Specific . (1) Violation of the following sections is punishable by fine or confinement in jail, or both, up to the amounts indicated opposite each: Section Penalty Ordinance - 5 4.980 to 4.98[9]8 500 fine or imposition of administrative civil penalty pursuant to section 2.018 4.989 See subsection (10) of this section (10) Violation of section 4.989 and any rules adopted thereunder is punishable by a fine of not more than $360. Each violation shall constitute a separate offense, and each day that a violation continues shall constitute a separate offense. Section 3. The City Recorder, at the request of, or with the concurrence of the City Attorney, is authorized to administratively correct any reference errors contained herein, or in other provisions of the Eugene Code, 1971 to the provisions added, amended, or repealed herein. Passed by the City Council this Approved by the Mayor this ____ day of ____________, 2006 ____ day of ______________, 2006 ___________________________ ______________________________ City Recorder Mayor Ordinance - 6 ATTACHMENT B PROPOSED USED MERCHANDISE DEALERS ORDINANCE INFORMATION SHEET February 2006 This information sheet has been prepared to outline several of the current trends involving property crimes as they relate to used merchandise dealers, the current limitations and a proposed solution for local law enforcement jurisdictions to regulate used merchandise dealers. In addition, some of the concerns expressed by used merchandise dealers regarding the proposed implementation of the amended Used Merchandise Dealer Ordinance and automated reporting are also included. CURRENT TRENDS INVOLVING PROPERTY CRIMES The reported financial loss to the members of our community from crimes involving burglary and theft for 2003 was $5,941,678. That number exceeds the property losses from all other forms of property crimes in Eugene for 2003. For 2003, the Eugene police department recovered 7.53% of property reported stolen in burglaries and thefts. Although Lane County and law enforcement jurisdictions within Lane County may have different statistical numbers representing their property loss verses their recovery rate, the statistical percentages for recovered property remains very low. Individuals involved in property crimes frequently sell or trade the stolen property to a variety of sources for cash or drugs. Some common recipients of this stolen property include drug dealers, individual citizens, pawn shops and secondhand dealers. Upon the examination of secondhand dealer transactions from three local full service secondhand stores during a two-month period, it was discovered that 40.9% of the secondhand transactions were conducted by customers who have prior local arrest histories for property or drug crimes, excluding arson and less than an ounce of marijuana arrests/citations. Currently, the Eugene Police Department has two full-time property crime investigators and a property crime analyst assigned to regulate approximately 60 secondhand stores, investigate and recover stolen property sold to secondhand stores and process approximately 54,000 secondhand dealer reports. Due to the limited resources available approximately less than half of the all secondhand dealer reports are not processed or compared for matches with stolen property lists. A PROPOSED SOLUTION TO IMPROVE LAW ENFORCEMENT’S EFFICIENCY In May of 2002, the city of Eugene began to explore the feasibility of using an automated reporting system for Used Merchandise dealers for the purpose of developing a more efficient method for pawnshops and secondhand dealers to report pawn, consignment, and buy transactions to law enforcement. The goals of this project were to develop a more efficient method of collecting and disseminating pawn, consignment, and buy information; to develop a more efficient method of comparing reported stolen property lists with pawned, consigned, or sold items; and to reduce the work hours needed to collect, enter and retrieve information about this property. Although the employment of automated pawn systems is a relatively new alternative to the traditional methods of reporting and investigating pawn shops and secondhand dealers, it is not an alternative that has been untried. Currently several law enforcement agencies within the United States and Canada are using some form of an automated pawn system to assist them in their investigation of pawn and secondhand dealer transactions. Many of these systems are stand-alone systems with limited cross-jurisdictional application that have been developed by the individual agencies to meet their specific needs. After the examination of several available automated reporting systems Lane County and the cities of Eugene and Springfield initiated a pilot project for automated reporting of used merchandise transactions to law enforcement. The vendor chosen through a formal Request for Proposal process provides the internet-based program for collection, storage and delivery of transaction information gathered in pawn shops and secondhand goods or used merchandise businesses. The automated reporting system links police services to a real-time database that displays information on transactions occurring in pawn and secondhand businesses. Pawn and secondhand businesses enter every transaction through a computer which is faster and more economical than with any paper method. All information is transferred by Internet into the vendor’s database. Police Services using this system have round-the-clock access to a database that covers jurisdictions across the country. Initially, four secondhand stores agreed to participate in the pilot project, increasing to seven stores by 2005. During the course of the three-year pilot project, the vendor modified their automated reporting system to integrate their systems with the regional Area Information Regional System (AIRS) system. This is a very significant benefit as there are no available commercial products that will integrate with AIRS. Sizable resources in programming time have made the automated reporting system as seamless as possible and have addressed the specific needs of both law enforcement and secondhand businesses, making the system much more effective locally. The result of this effort eliminates redundant data entry in multiple data systems or logs, and thus integrates the automated system with AIRS (local), LEDS (state), and NCIC (Federal) databases to identify stolen property. In March of 2004, Lane County, Eugene and Springfield jointly developed a proposed Used Merchandise Dealer Ordinance that updated current practices and procedures, including the use of automated reporting. Upon completion of the proposed Used Merchandise Dealer Ordinance, used merchandise dealers and owners were invited to attend a meeting to discuss the proposed ordinance and automated reporting. Following an analysis of comments and suggestions made by the used merchandise dealers, several of the suggestions were incorporated into the draft ordinance. In October of 2004, used merchandise dealers and owners were invited to attend a second meeting to discuss the revised ordinance. At the conclusion of the meeting with the used merchandise dealers, government representatives of Lane County, Eugene and Springfield agreed to proceed with the adoption process. THE CONCERNS OF SOME USED MERCHANDISE DEALERS Of the 70+ used merchandise dealers affected by the ordinance and invited to participate in the meetings relating to the Used Merchandise Dealer Ordinance, only representatives from six stores expressed opposition to the implementation of the ordinance. The three primary concerns voiced by secondhand dealers opposed to the ordinance, were the expenses of automated reporting, the use of a Canadian company as the automated reporting system vendor and the privacy of individual store business and customer records. The Funding Model for Automated Reporting -- The funding model originally required that individual stores pay for the cost of automated reporting in the form of a transaction fee for every pawn, repawn, consignment, recycle or purchase that the store makes from the public. The ordinance would have allowed the individual stores to recover the cost of automated reporting from the customer selling property to the store. However, following extensive discussion with store owners on this model, the vendor developed an alternative model for a set annual fee based upon the history of annual store transactions. Eugene found this to be a viable option after analyzing the funding currently available for the program and factoring the potential savings in staff time. Store owners who had been opposed to the transaction fee funding model found the annual set-fee model more viable and withdrew most objections to the proposed ordinance. The Use of a Canadian Automated Reporting Company -- Business Watch International’s (BWI) automated reporting system was chosen for the pilot project because they had a product that was successfully operating in other jurisdictions and one that met the needs of Eugene, Springfield and Lane County law enforcement. Additionally, during the pilot project BWI continued to improve and refine their product to meet the needs of local law enforcement and the pawn/secondhand dealer industry, while reducing their operational costs. Although BWI is a Canadian-based company they are licensed in the United States and have business operations in other U.S. cities. Privacy of Business and Customer Records -- The information obtained through automated reporting includes essentially the same public record information that law enforcement is currently collecting from used merchandise dealers. The difference is some updating and reformatting of information and the submission via a secure internet connection. The vendor chosen by the city of Eugene will act as a warehousing/storage company that releases only reportable information to law enforcement. Businesses that choose to utilize BWI’s point- of-sale systems may submit business records to BWI which remain the sole property of the individual store and none of that information can be released without the consent of the individual store. Some merchants have expressed concerns that requiring the previously optional report of the merchant’s purchase price in the automated report violates their protection of proprietary information. Police have the authority to further the public’s health, safety and welfare. Other jurisdictions in the state require the collection of pricing information and the state of Oregon requires the information for “pawnbrokers”. Reporting requirements contained in the ordinance are similar to other requirements upheld in other jurisdictions around the country. The benefit to law enforcement from this information is significant in the discovery of possible stolen property. For example trained investigators are alerted when expensive construction tools, still sealed in original wrappings, are purchased by used merchandise dealers for a very small price. ATTACHMENT C USED MERCHANDISE DEALERS ORDINANCE FUNDING MODELS The pricing model proposed by the inter-agency team from Eugene and Springfield Police Departments and the Lane County Sheriff’s Office (LCSO) to fund the Used Merchandise Dealer Automated Reporting System is based on the use of a third party vendor who will provide the internet-based program for collecting, storing and delivering transaction information gathered in pawn shops and secondhand goods businesses. The model is designed to apply to all stores in Eugene, Springfield and unincorporated Lane County who meet the qualifications as set forth in the proposed amendments to the Used Merchandise Dealers Ordinance (see Attachment “A”). If the other jurisdictions do not successfully pass a similar ordinance that requires automated reporting of transactions then the vendor’s quote for the annual system fee would be modified to reflect the reduced number of transactions. As currently proposed, the three law enforcement agencies would enter into an inter-agency agreement which would identify that the program would be administered by the Eugene Police Department (EPD). When the program is operational, the automated systems of the vendor will replace the administrative duties that are now performed manually by EPD’s two Property Crime detectives and the civilian staff person. The three employees would then have additional time to utilize the electronic database with real-time information and conduct other enforcement activities. Fees charged to stores are based upon each store’s level of annual transactions. These fees will be used to pay the annual systems charges to the vendor. Eugene’s financial systems are capable of billing the respective stores. The EPD would receive the fees which would offset the annual vendor fees. The annual cost to administer the program is estimated at $700. In this model the used merchandise stores which already require a level of police scrutiny that is recognized in the existing Used Merchandise Dealer Ordinance, would be required to contribute to the cost of providing necessary law enforcement oversight. Following the approval of the amendments to the Used Merchandise Dealers Ordinance, the City Manager will be authorized to develop a fee schedule which is adopted through the Administrative Rule process. An estimate of proposed charges to the stores that would be sufficient to fund the annual system is provided below: ESTIMATE OF ANNUAL SYSTEM CHARGES (Fees) Number of Range of Estimated Tier Level Pricing Model 1 Stores Annual Transactions Annual Charge 2 Per Store Per Store 7 >3,000 I $700 8 1,000 – 2,999 II $550 23 300 - 999 III $400 20 <300 IV $200 58 5,625 $22,500 1 Stores are located in Eugene, Springfield and Unincorporated Lane County 2 Based upon reported transactions in 2004 ALTERNATIVE FUNDING MODELS FOR AUTOMATED REPORT OF USED MERCHANDISE TRANSACTIONS At the request of a City Council member staff have prepared two alternative models that could be used to fund automated reporting of transactions by used merchandise dealers. OPTION “B” Financial Considerations: In Option ‘B’, the city of Eugene would fund the entire cost of the automated system. Each jurisdiction would continue with their updates to the Used Merchandise Ordinance to require automated reporting and through an Inter-governmental Agreement would agree that Eugene would finance the entire cost of the program. The used merchandise stores would pay no fees to participate in the program, but would be required to report transactions electronically. The nominal cost of providing a computer and internet connection to record and transmit the electronic data could be the responsibility of the participating businesses or the city of Eugene could purchase equipment and services for the businesses. Eugene would still administer the program and would pay the contract with the third-party vendor. The cost to the City of Eugene is estimated at an annual figure of $22,000, excluding the purchase of computers and internet connection. Implications: A regional model is essential to ensure the viability of the automated reporting system. (Without regional participation, stolen merchandise can more easily be resold in other jurisdictions, thus thwarting the matching of stolen property to items being purchased by the used merchandise dealers.) Option ‘B’ would require the city of Eugene to subsidize the cost of the automated electronic reporting system for some stores which are located in Springfield and the unincorporated areas outside of Eugene. A project driven and financed by the city of Eugene may garner less participation by merchants and law enforcement than Option ‘A’ which connects each jurisdiction’s stores with that jurisdiction’s law enforcement system. Because privately operated secondhand or used merchandise stores require a level of police oversight for the safety and welfare of the public, the city of Eugene would be using general funds to subsidize the cost of improving this oversight system through automated reporting. Choosing to pay the fees for private businesses in Option ‘B’ may set a new precedent for City of Eugene initiatives or changes to the City Charter that are designed to benefit public welfare and as a result have a financial impact on individuals or businesses. OPTION ‘C’ Financial Considerations: In this model, each jurisdiction could decide independently how they would pay for the program. The Intergovernmental Agreement would specify the funding share provided by each participating agency or the fees coming from used merchandise stores located in each jurisdiction. Eugene would still administer the program, but the cost of administration would increase considerably due to the complexity of this option. We are unable at this time to provide an estimate for administration expenses due to the choices that need to be made in developing this model. Implications: If some jurisdictions should decide that they would not require the used merchandise stores to pay the annual fee then this model would cause the city of Eugene to pay the business expenses of stores which are located outside of Eugene’s jurisdiction. Other implications mentioned in Option ‘B’ would also apply. Inconsistency in the application and funding of this model would make administering the ordinance difficult.